Affiliate And Broker: Business Of Referral

The business of referral is perhaps as old as the business itself. It is also practiced as widespread as people can imagine. When you tell someone about the great food you eat at your favorite restaurant, then you are doing the referral business.

The restaurant owner encourages you to tell your friends about the good thing, but only tell the restaurant manager when you have complaints. What you don't see is that many people like you are referring the restaurant to his/her friends. So more people come to the restaurant. And the restaurant gets better because it listen to your feedback and make the improvement. No wonder that restaurant is always full.

Unfortunately you don't get paid for referring someone to your favorite restaurant. Well, actually there are other businesses that pay you for your referral.

Many established business has long recognized this power. Insurance and real estate industries in fact pay the commission to the people who promote and help make the deal. In this industry the term of broker is invented.

Another term comes up in internet i.e. Affiliate. In essence this business is doing the same: the affiliates make the referral to the internet users to buy the products or services. The affiliate then get paid by the principal business.

Different name, but you get same result: nice commission!

Now look at these 2 kinds of referral business:

Broker

There are many brokers these days such as stock broker, real estate broker, insurance broker, business broker, etc. As our focus is a home-based business, then the selection is narrowed to business broker. Stock broker, realestate broker, and insurance broker require a nice, luxurious office at prime location plus a hefty sum of money to spend before you open for business.

Business broker is basically help business seller sell the business. This is a delicate situation for a business owner who wants to sell his/her business. He/she cannot publish it because it will affect employee and supplier relationship: Employees would lower their productivities and suppliers would stop sending delivery due to business uncertainty. So business owner approaches the business broker to help find buyer.

Business buyer can also approach business broker to find the suitable business for sale.

Business broker conducts due diligence and valuation to come up with fair value of business. He/she will get commission after the business deal is done.

Actually business broker is a very lucrative business. Average income of business broker in America is US$300,000 per year.

Affiliate

It started in 90's when Amazon.com invited affiliates to join its marketing arsenal to advertise its products . Since then, other companies followed the suit.

How does it work?

The affiliate gets its own ID from the marketing company. Whenever the affiliate refers someone else to buy the products from the marketing company, the affiliate put his/her ID as referral number. The marketing company tracks all orders along its Affiliate ID. In certain period, say monthly, the marketing company publishes its affiliates report about each business and its commission.

Using internet, the affiliate business offers many scheme as technology allows some customization. For example, the affiliate can get paid for each customer visiting to the marketing company website. Or the affiliate can only get paid for each customer buying the products.

Now the lifetime of affiliate program can also be limited. For example, the affiliate can get paid for each customer buying the products within 3 months. After 3 months, the affiliate cannot get paid. The cookie technology that is implanted in the customer's web browser is very popular to achive this purpose. The cookie is set to expires in 3 months.

The best affiliate program is the one with reasonably high commission and lifetime membership. You don't want to get too high a commission because then the price becomes too high, and you don't get the sale.

You can get more info about affiliate program from an ebook of master course written by Ken Evoy. Download Affiliate Master Course.